This is a case of a particular store manager deciding that he doesn't want someone as a customer. As far as I'm aware, there is no constitutional right to demand that any particular business must perform any particular service for you.
Unfortunately if it is true (as GB said, this might not be), it's not up to a manager to decide on his personal whims whether or not he wants the business of a particular person. He is the paid representative of a corporation - he does NOT own the store and does not dictate the terms under which it conducts business.
Also, while you are technically correct that there is no constitutional guarantee that a private business must service you, it is also true that as a group, persons with common goals have long held up the option of using boycott to financially pressure a business into behaving differently. Personally I still haven't seen anything that truly faults the company itself, but if it turns out that they DO allow/condone this type of behavior, then I have no problem taking my business elsewhere. As we have no constitutional right to force them to process our photos, neither do they have any constitutional right to your business.
Also, digital cameras are cheap, plentiful and easy to operate.
Your point being? People still often need/want hard copies of their photos. I have several digital cameras that I use extensively (my Canon Digital Rebel XT is my favorite). However, when I need a hard copy I still have to have a photo processor produce it (unless you print at home, which is both more expensive when factoring in ink costs AND produces an inferior result). I actually got the impression that this was actually what was being done here as they specifically referred to printing the photos (whereas photos derived from film as more commonly referred to as being developed). I don't personally use Walgreens for this (I use a web service called WinkFlash), but I DO have a problem with them refusing it.